Both the pound and London share prices were losing ground early Friday, after two UK economic indicators made for depressing reading, compounding the sense of unease caused by preparations to pick the third prime minister so far this year.
The FTSE 100 index opened down 21.47 points, 0.3%, at 6,922.44. The FTSE 250 was down 99.48 points, 0.6%, at 17,289.45 and the AIM All-Share down 0.88 of a point, 0.1%, at 785.56.
The Cboe UK 100 opened down 0.2% at 692.34, the Cboe UK 250 down 0.4% at 14,779.33, and the Cboe Small Companies down 0.1% at 12,259.67.
Following the resignation of Liz Truss, the Conservative Party now begins the process to select a new leader, with the result to be announced no later than next Friday.
‘Normally, a PM resignation means uncertainty and limited visibility; it’s not a preferred scenario for the market. But the little time Liz Truss stayed in power was so hectic that investors welcomed the news that she departs sooner rather than later,’ said Swissquote Bank’s Ipek Ozkardeskaya.
Amongst those believed to be in the running are former chancellor Rishi Sunak, leader of the house Penny Mourdaunt, and even former PM Boris Johnson.
‘Whoever it is, the main challenge for the next PM will be to reassure the markets! We expect to see some more bumpy trading for the British assets until the dust settles,’ Ozkardeskaya added.
Sterling was quoted at $1.1199 early Friday, lower than $1.1294 at the London equities close on Thursday.
UK retail sales suffered a bigger-than-expected decline in September, according to figures from the Office for National Statistics.
Retail sales fell 6.9% annually in September, with the decline accelerating from a 5.6% fall in August. It also was worse than FXStreet-cited market consensus, which had expected a fall of just 5%.
On a monthly basis, retail sales fell 1.4% in September, with the decline easing slightly from 1.7% in August. However, sales saw a steeper fall than expected, with consensus expecting a 0.5% drop.
Meanwhile, consumer confidence rose slightly in October but remains near historic lows as the UK grapples with the ‘new abnormal’ of soaring energy, food and mortgage costs.
GfK’s long-running consumer confidence index clawed back two points but continues to languish at an overall score of minus 47.
Among retailing stocks, Next was 2.3% lower, while JD Sports Fashion lost 4.4% and Frasers shed 3.3%.
Elsewhere, InterContinental Hotels Group was down 2.3%, on news that its chief financial officer, Paul Edgecliffe Johnson, will leave to become CFO of sports betting firm Flutter Entertainment.
Flutter was down 1.6%.
IHG reported strong revenue growth in the third quarter, with revenue per available room rising 28% year-on-year. RevPAR now exceeds pre-pandemic levels, it noted.
The hotel owner said demand remained ‘robust’, and it managed to open 51 hotels during the quarter, despite an industry-wide slowdown in hotel opening activity.
In the FTSE 250, Asos lost 4.1%. The stock was cut to ‘reduce’ by HSBC.
Elsewhere, food delivery firm Deliveroo said gross transaction values rose 8% annually in the third quarter to £1.70 billion, as orders fell 1% to 72.8 million.
However, it lowered its guidance range for GTV growth for the full year to 4% to 8% in constant currency, compared to a previous range of 4% to 12%.
It expects a slight improvement in the margin for earnings, aiming to reach breakeven earnings before interest, tax, depreciation and amortisation at some point between the second half of 2023 and the first half of 2024.
Deliveroo shares rose 1.9% in early trade.
On AIM, Orosur Mining surged 22%.
The South America-focused mineral exploration and development company shared ‘encouraging’ drill results from Pepas and Pupino. Holes PEP005 and PEP007 returned ‘substantial gold intersections’, including 80.55 metres at 3.05 grams per ton gold.
‘PEP001 was clearly a spectacular result, but being only the first hole, caution was warranted. It is encouraging therefore that further holes have confirmed this first result and we eagerly await results from better positioned holes,’ CEO Brad George said.
In European equities on Friday, the CAC 40 in Paris opened down 1.1%, while the DAX 40 in Frankfurt opened 0.9% lower.
The euro stood at $0.9774 early Friday, against $0.9822 on Thursday. Against the yen, the dollar was quoted at JP¥150.42, up versus JP¥149.77.
Gold was quoted at $1,620.01 an ounce early Friday, lower than $1,641.90 on Thursday. Brent oil was trading at $92.03 a barrel, lower than $93.29 late Thursday.
In Asia on Friday, equities traded mostly lower. The Japanese Nikkei 225 index closed down 0.4%. In China, the Shanghai Composite closed up 0.1%, while the Hang Seng index in Hong Kong was down 0.1% in late trade. The S&P/ASX 200 in Sydney closed down 0.8%.
Still to come on Friday's economic calendar is eurozone consumer confidence at 1500 BST.
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